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South American Unity May No Longer Be a Distant Dream:
The Region’s Left-leaning Governments Strive for Integration as Washington’s Plan to Isolate Venezuela’s Chávez Fails

By Seth DeLong
The Council on Hempispheric Affairs
April 11 2005
Page 2

Why the Current Drive for Unity May Succeed
The most immediate obstacle to intra-regional trade and unity has always been the twin barriers of harsh geography and the lack of a sufficient technological and industrial infrastructure needed to subdue it. As observed by Brazilian Foreign Minister Celso Amorim, "North America has been an integrated continent since the 19th century. We have only recently begun this process ourselves. The Atlantic-Pacific gap, which doesn’t exist in North America, is dramatic in South America, because of the need to cross the Andes or the Amazon." To overcome such problems, the leaders at Cuzco pledged $4.2 billion to finance the construction of 32 regional infrastructural projects, scheduled for completion within the next five years. The projects, which include pipelines, highways, railways, airports and an array of telecommunications upgrades, are meant to facilitate a freer intracontinental flow of goods across geographic divides. If these projects are completed, they will represent an unprecedented step forward towards the goal of South American unity and economic self-sufficiency.

Why South America is Pursuing Regional Integration
There are two main reasons why South American countries are attempting to coalesce into a regional trade bloc: first, on the economic front, the region’s leaders view integration as a boon to their interests; second, on the political front, the continent’s majority of center-left governments see South American unity as a way to counteract Washington’s self-serving designs for the region. These reasons are highlighted in Latin America’s general frustration towards the proposed Free Trade Area of the Americas (FTAA), the interhemispheric trade initiative proposed in Miami eleven years ago.

As the most concrete manifestation of the vaunted "Washington Consensus" of the early 1990s, the FTAA is viewed by proponents and detractors alike as the extension of NAFTA to the rest of the hemisphere. To Washington’s dismay, however, most of South America has become extremely wary of the FTAA and has been probing the path of intrahemispheric trade as an alternative to Washington’s preferred plans for bilateral trade agreements, with Chile being the notable exception. The region’s center-left governments typically view the FTAA as a possible threat to their fragile economies, environments and workers’ rights.

For example, regarding patents, South American countries have witnessed the effects of NAFTA on Mexico and the potentially harmful aspects of its protection clauses in the NAFTA-inspired Central America Free Trade Agreement (CAFTA). Writing on the patent issue in the Washington Post on March 30, Harold Meyerson accurately observed that "CAFTA imposes a five-to-ten year waiting period on generic competitors . . . CAFTA thus effectively ensures the drug companies an extension of their monopoly on high-priced medications. It also ensures that thousands of Central Americans in need of such medications will have to go without." On the unjust nature of U.S. trade agreements, Meyerson further notes "the fundamental reality of most of our trade accords: They are designed to maximize corporate profits no matter the cost to the peoples of the signatory nations."

Not surprisingly, South America’s leaders have chosen strength via economic integration rather than allow foreign drug companies to pillage their public health sectors. So long as they see the FTAA as curtailing their control over their own economies by such means as patent controls, elimination of social subsidies, and the privatization of the public sector by foreign investors, they are likely to pursue continental solidarity as an alternative to Washington’s strategy of divide and conquer.

It’s the Hypocrisy, Stupid
Though the above issues are partly responsible for pushing the region towards unity, Washington’s egregious double standards in preaching open markets and free trade as the miracle cure for economic woes while subsidizing the U.S. agricultural industry are South America’s chief points of contention with the FTAA. These subsidies, which have cost U.S. taxpayers $131 billion since 1995, make it impossible for farmers in countries like Brazil to fairly compete on the global market. When Washington adds tariffs and quotas to the subsidies, the result is a virtual U.S. shut-down on South American agro exports. Arguing for the termination of farm subsidies in Investor’s Business Daily, Dr. Benjamin Powell, director of the Center on Entrepreneurial Innovation at the Independent Institute, noted that "Ending farm subsidies in America would also aid impoverished parts of the world [and] abolishing farm subsidies in rich countries would add $100 billion to global income."



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